Hulu’s CPM rates have been much higher from the start: In 2009, average CPMs for Hulu reportedly varied between $40 and $50.
And several parties participate in these revenues: Content owners receive up to 70 percent of the advertising revenues generated on Hulu, and distribution partners up to 10 percent of the advertising revenues. This means CPMs on Hulu may have to be even higher to create parity.
Prime-time CPM rates for original dramatic content: In 2009, rates were estimated to be between $15 and $25, yielding an estimate of well over $1,200 per thousand viewers per hour.
Powerful cable operators, which control about 70 percent: Satellite companies account for the remaining 30 percent. Standard & Poor’s, “Broadcasting, Cable & Satellite Industry Survey,” July 30, 2009.
“gets our content out there when and where people want it: “Some Online Shows Could Go Subscription-Only,” New York Times, March 29, 2009.
a whopping quarter of the total online-video advertising revenues: These are data for 2008: Hulu was responsible for 5 percent of video streams and collected about a quarter of the total of $700 million online-video advertising revenues. I obtained data from various sources, including Nielsen VideoCensus and eMarketer. For more information, see: Anita Elberse and Sunil Gupta, “Hulu: An Evil Plot to Destroy the World?,” Harvard Business School Case 510–005.
Hulu’s estimated revenues rose to nearly $700 million in 2012: Jason Kilar, “A Big 2012,” Hulu blog, December 17, 2012.
In the 2006–2007 season, the Metropolitan Opera: This section is based on: Anita Elberse and Crissy Perez, “The Metropolitan Opera (A),” Harvard Business School Case 509-033; Anita Elberse and Crissy Perez, “The Metropolitan Opera (B),” Harvard Business School Supplement 509-034.
Although opera attendance had risen in the 1980s and 1990s: U.S. Census, “Statistical Abstract,” 2008; U.S. Census Bureau, “Profile America,” February 6, 2006.
“My aim is to strip away the veil of elitism: Peter Gelb, Lecture at the Kennedy School of Government, Harvard University, March 3, 2008.
The largest independent performing arts company in the world: The Metropolitan Opera, 2005–2006 Annual Report; Peter Gelb, Lecture at the Kennedy School of Government, Harvard University, March 3, 2008.
Gelb said, he wanted to “conceive of it as an event”: “As Audience Shrinks, the Met Gets Daring,” New York Times, February 11, 2006.
But that didn’t come cheap: the simulcasts required substantial investments: Peter Gelb, Lecture at the Kennedy School of Government, Harvard University, March 3, 2008; “Music for the Masses,” Economist, July 3, 2008.
In total, three hundred thousand people turned out for the Met’s first season: “Sightings: The Metropolitan Opera Goes to the Movies,” Wall Street Journal, March 29, 2008.
In April 2007, as audiences settled into their seats: Boston Opera representative; Peter Gelb, Lecture at the Kennedy School of Government, Harvard University, March 3, 2008; “Man Behind the Curtain,” New Yorker, October 22, 2007; “Music for the Masses,” Economist, July 3, 2008.
“Just as sports teams have discovered that fans still: Peter Gelb, Lecture at the Kennedy School of Government, Harvard University, March 3, 2008.
Over the past twenty years, only twenty-six different operas: Opera America, “Most Produced Works,” www.operaamerica.org, accessed on April 30, 2008.
Early evidence emerging from surveys offers an explanation: Opera America, “Metropolitan Opera Live in HD Survey,” prepared by Shugoll Research, July 2008. Survey results are summarized in: Anita Elberse and Crissy Perez, “The Metropolitan Opera (B),” Harvard Business School Supplement 509-034.
In the early 2000s, there were close to 180 American opera companies: U.S. Census Bureau, “2002 Economic Census.” (This is the last available data point before the launch of the Met’s Live in HD program.)
Attendance figures and revenues were quite concentrated: I received these data from Opera America; for a full overview, see: Anita Elberse and Crissy Perez, “The Metropolitan Opera (B),” Harvard Business School Supplement 509-034.
“one in 15,000 opera singers makes it”: “Divas in Training,” Wall Street Journal, April 24, 1996.
Luciano Pavarotti, reportedly earned $100,000 for a recital: “In Final Twist, Ill Pavarotti Falls Silent for Met Finale,” New York Times, May 12, 2002.
“they are invading our space, to put it bluntly”: “Verdi with Popcorn, and Trepidation,” New York Times, February 15, 2009.
San Francisco Opera, has called the Met’s innovations “a bombshell”: “Met Opera to Expand in Theaters Across Globe,” New York Times, August 9, 2007.
the Met collected a record-high $182 million in private donations: Daniel J. Wakin and Kevin Flynn, “A Metropolitan Opera High Note, as Donations Hit $182 Million,” New York Times, October 10, 2011.
Chapter Six: Will Digital Technology Threaten Powerful Producers?
“I like the people at our record company,: This section is based on: Anita Elberse and Jason Bergsman, “Radiohead: Music at Your Own Price (A),” Harvard Business School Case 508-110; and Anita Elberse and Jason Bergsman, “Radiohead: Music at Your Own Price (B),” Harvard Business School Supplement 508-111. Thom Yorke is quoted in: Josh Tryrangiel, “Rebels Without a Contract,” Time, March 19, 2007.
By 2007, Radiohead’s six albums collectively had sold over eight million copies: I obtained recorded-music sales data from Nielsen SoundScan and Billboard. The quote can be found in: Jon Pareles, “With Radiohead, and Alone, a Sweet Malaise,” New York Times, July 2, 2006.
“The first time we did All I Need, boom! it was up on YouTube: Jon Pareles, “Pay What You Want for This Article,” New York Times, December 9, 2007.
Bricks-and-mortar record stores accounted for just over 30 percent: As reported in: e-Marketer, “Recorded Music: Digital Falls Short,” November 2007. For more information, see: Anita Elberse and Jason Bergsman, “Radiohead: Music at Your Own Price (A),” Harvard Business School Case 508-110.
files were traded at an estimated ratio of twenty illegal downloads: International Federation of the Phonographic Industry, “IFPI Digital Music Report 2008,” January 24, 2008.
Radiohead retained all rights to the album, and worked out: Lars Brandle, “Radiohead in Direct-Licensing Deal for New CD,” Billboard, October 9, 2007.
Describing traditional strategies as a “decaying business model: Josh Tryrangiel, “Rebels Without a Contract,” Time, March 19, 2007.
“You can say we’ve earned the privilege to do things our way”: Gerald Marzorati, “The Post-Rock Band,” New York Times, October 1, 2000.
For instance, OK Computer was introduced with a single, Paranoid Android: Paul Sexton, “Capitol, Parlophone Are Confident in Radiohead,” Billboard, May 10, 1997.
For Kid A, the band’s fourth album, Radiohead eschewed a traditional promotional approach: Paul Sexton, “Radiohead Won’t Play by Rules,” Billboard, September 16, 2000; Charles Goldsmith, “Radiohead’s New Marketing: Videos—and Singles to Disappear Completely,” Wall Street Journal, September 18, 2000.
“want[ed] to find other ways of doing what has to be done: Gerald Marzorati, “The Post-Rock Band,” New York Times, October 1, 2000.
A small group of fans pushed the average price up: Additionally, one in every twenty-five transactions was for a deluxe box set, at $80; the deluxe album alone thus yielded $3.20 in revenues per transaction.
240,000 people downloaded the album for free over BitTorrent: “Free? Steal It Anyway,” Forbes, October 16, 2007.
$2.7 billion in A&R and another $1.8 billion in marketing in 2011: International Federation of the Phonographic Industry, “Investing Music: How Music Companies Discover, Nurture, and Promote Talent,” IFPI, 2012.
Described as “the darling of the self-publishing industry: Sarah Millar, “How a Failed Author Made $2 Million from e-Books,” Toronto Star, March 3, 2011.
By 2011, she had seven books on USA Today’s bestsellers list: Dianna D
ilworth, “Amanda Hocking Is Second Self-Published Author to Sell a Million Kindle eBooks,” Mediabistro.com, November 9, 2011.
Held up as an example of an author who had shrewdly: Ibid.; Julie Bosman, “Noted Self-Publisher May Be Close to a Book Deal,” New York Times, March 21, 2011.
she shopped a new four-book paranormal series, Watersong: Julie Bosman, “Noted Self-Publisher May Be Close to a Book Deal,” New York Times, March 21, 2011.
“I want to be a writer,” she wrote in her blog: Ibid.
Self-publishing is “easier to get into but harder to maintain: Amanda Hocking, “Some Things That Need to Be Said,” AmandaHockingBlogspot.com, March 3, 2011.
of the top one hundred albums on the Billboard chart in 2012: According to data by Nielsen SoundScan. In September 2012, the merger between Universal and EMI was completed, leaving only a “big three.”
St. Martin’s had to overcome several other major publishers’ bids: Julie Bosman, “Self-Publisher Signs Four-Book Deal with St. Martin’s,” New York Times, March 24, 2011.
“In terms of digital income, we’ve made more money: “Estimates: Radiohead Made Up to $10 Million on Initial Album Sales,” Wired.com, October 19, 2007.
“We can safely say that the experiment really worked: Louis CK, “A Statement from Louis CK,” buy.louisck.net, December 13, 2011.
Total sales of the special are now reportedly well above $1 million: Louis CK, as told to Jimmy Fallon, on Late Night with Jimmy Fallon, December 21, 2011.
“It only works for us because of where we are”: “David Byrne and Thom Yorke on the Real Value of Music,” Wired, December 18, 2007.
The iTunes Store has a larger share of the online music market: According to press releases by the NPD Group. See, for instance: NPD Group, “iTunes Continues to Dominate Music Retailing,” press release, September 18, 2012.
When a special request comes in from Apple’s highest echelons: This section is based on: Anita Elberse and Brett Laffel, “Major League Baseball Advanced Media: America’s Pastime Goes Digital,” Harvard Business School Case 510-092.
the URL MLB.com directed visitors to a Philadelphia law firm: Will Leitch, “MLB’s Digital Dominance,” FastCompany, March 20, 2008.
an idiotic suggestion, co-workers would respond with “Japanese audio!”: Steven Levy, “Covering All the Online Bases,” Newsweek, June 25, 2007.
Newsweek called BAM “the grand-slam online leader among major sports”: Ibid.; Mark Newman, “MLB.TV Continues to Raise the Bar,” MLB.com, February 3, 2010. (The number one selling iPhone app was Navigon AG’s MobileNavigator North America, priced at $89.99.)
in the 2009 season, seventy-three million tickets to live games were sold: I consulted data reported in: Forbes (“The Business of Baseball,” April 22, 2009; “The Business of Basketball,” December 9, 2009; “The Business of Football,” September 2, 2009; “The Business of Hockey,” November 11, 2009); and MLB, NFL, NBA, and NHL (National Hockey League) press releases. For a complete overview, see: Anita Elberse and Brett Laffel, “Major League Baseball Advanced Media: America’s Pastime Goes Digital,” Harvard Business School Case 510-092.
The contract with ESPN, owned by Disney, was worth $2.4 billion: These statistics are based on data reported in: “ESPN to Add Monday Night Baseball in New Deal,” ESPN.com, September 14, 2005; “MLB, Fox Reach Seven-Year Extension,” MLB.com, July 11, 2006; “Fox Reups MLB TV Deal,” Mediaweek, July 11, 2006;”MLB’s Squeeze Play: League Struggles to Renew TV Rights Deals,” Brandweek, February 13, 2006.
They have taken a hard line against cable networks: When, in March 2010, Comedy Central pulled The Daily Show with Jon Stewart and The Colbert Report, along with a handful of Viacom library shows, from Hulu, pressure from cable operators on Comedy Central was rumored to have contributed to the decision.
In late 2009, the NFL was wrapping up its biggest season: This section is based on: Anita Elberse, Kelsey Calhoun, and Daven Johnson, “The NFL’s Digital Media Strategy,” Harvard Business School Case 511-055.
Cable channel ESPN annually paid the league well over $1 billion: “Sports Business Resource Guide & Fact Book: Digital Media Rights,” SportsBusiness Journal, 2010.
Verizon would pay the NFL $720 million over four years: John Ourand and Terry
Lefton, “Verizon-NFL Deal: Convergence Is Here,” SportsBusiness Journal, March 15, 2010.
“the biggest overlap between a sponsorship and media deal”: Ibid.
satellite radio network Sirius; wireless carrier Verizon: Sirius is now known as SiriusXM.
“We are keeping our eyes on this. It’s starting to nibble at the edges”: John Ourand and Terry Lefton, “Verizon-NFL Deal: Convergence Is Here,” Sports Business Journal, March 15, 2010.
over 70 percent of all Americans proclaim themselves football fans: I received data from: ESPN Sports Poll 2009, Nielsen, and OTX Weekly Tracker. For an overview of the data, see Anita Elberse, Kelsey Calhoun, and Daven Johnson, “The NFL’s Digital Media Strategy,” Harvard Business School Case 511-055.
In fact, as of early 2013, four Super Bowls belong: The top five are: 1. Super Bowl XLVI (2012) with 111.3 million viewers; 2. Super Bowl XLV (2011) with 111.0 million viewers; 3. Super Bowl XLVII (2013) with 108.4 million viewers; 4. Super Bowl XLIV (2010) with 106.5 million viewers; and 5. M*A*S*H finale (1983) with 106.0 million viewers. (Source: Nielsen ratings.)
more of a guarantee of success than if you’ve got Brad Pitt, George Clooney: Sean Leahy, “NFL TV Ratings Soar; Dick Ebersol Says League’s Dominance Has Been Mind-Numbing,” Huddle, October 9, 2009.
in 2013, they reportedly paid as much as $3.8 million: Brian Steinberg, “Who Bought What in Super Bowl 2013,” Advertising Age, February 1, 2013.
Chapter Seven: The Future of Blockbuster Strategies
When Shawn Carter—better known as hip-hop megastar Jay-Z: This section is based on: Anita Elberse and Kwame Owusu-Kesse, “Droga5: Launching Jay-Z’s Decoded,” Harvard Business School Case 513-032.
a “lyrical memoir” that explained the hidden meanings behind: Michiko Kakutani, “Jay-Z Deconstructs Himself,” New York Times, November 22, 2010.
won Droga5 several of the advertising industry’s most prestigious awards: Among other awards, the campaign won Droga5 a Golden Effie 2012 (in the “Media Innovation” category), a Titanium Lion, an Integrated Grand Prix, an Outdoor Grand Prix, and a Direct Gold at the Cannes Lions International Festival of Creativity.
The agency released the book in the form of two hundred placements: Many illustrations spread out over two pages and were distributed as one placement.
Some of these placements were true works of art: Droga5’s campaign video, which shows many other examples, can be viewed at: www.droga5.com/#/casestudies/bingcs.
Priced at $35, the book sold three hundred thousand copies: I obtained data from Nielsen BookScan.
Warner Bros. teamed up with 42 Entertainment to develop an ARG: I compiled this information from the 42 Entertainment web site (www.42entertainment.com) and various campaign videos.
Lionsgate won accolades for its digital-marketing campaign for The Hunger Games: A useful summary of the campaign can be found here: Ari Karpel, “Inside ‘The Hunger Games’ Social Media Machine,” FastCompany, www.fastcocreate.com, accessed on December 1, 2012.
In my own research, I have examined how movie and video game trailers: Anita Elberse, Clarence Lee, and Lingling Zhang, “Viral Videos: The Dynamics of Online Video Advertising Campaigns,” Working Paper, Harvard Business School, January 2013. The study is based on data provided by Visible Measures.
they turn out in force primarily for the biggest brands: Anita Elberse, Clarence Lee, and Lingling Zhang, “Viral Videos: The Dynamics of Online Video Advertising Campaigns,” Working Paper, Harvard Business School, January 2013.
the star had amassed a net worth of over $450 million: Forbes Staff, “The Forbes 400: America’s Billionaires in the Making,” Forbes, September 24, 2010.
he is also an ext
remely capable businessman: Various articles provide insight into Jay-Z’s business interests: Jeff Leeds, “In Rapper’s Deal, a New Model for Music Business,” New York Times, April 3, 2008; Stuart Elliot, “A New Venture for Jay-Z, on Madison Avenue,” New York Times, February 8, 2008; Daniel Gross, “Jay-Z’s $450 Million Business Empire,” Yahoo!, March 25, 2011; Mike Snyder, “Jay-Z and Eminem Spin a Musical Game Out of ‘DJ Hero,’” USA Today, May 31, 2009.
Which outcome is more likely depends on how groups of consumers differ: The economics and marketing literature on bundling has traditionally emphasized one critical determinant of the payoff of a bundling strategy: the variance in so-called reservation prices across and within consumers. According to Schmalensee in his seminal 1984 paper, bundling “operates by reducing the effective dispersion in buyers’ tastes,” which will “enhance profits by permitting more efficient capture of consumers’ surplus” as long as people’s reservation prices are not perfectly positively correlated. The basic idea is that when reservation prices vary, a bundle can be designed to appeal (and more profitably sell) to consumers who would otherwise buy only one or a few items at prices below their reservation prices. I discuss the literature in my paper: Anita Elberse, “Bye-Bye Bundles: The Unbundling of Music in Digital Channels,” Journal of Marketing 74, no. 3 (May 2010): 107–23. For more information, see: Richard Schmalensee, “Gaussian Demand and Commodity Bundling,” Journal of Business 57 (January 1984): S211–30.
My own research shows that unbundling has had a strong negative impact: Anita Elberse, “Bye-Bye Bundles: The Unbundling of Music in Digital Channels,” Journal of Marketing 74, no. 3 (May 2010): 107–23.
Although albums by the biggest stars with the strongest track records: In the study, track records were measured by the number of an artist’s albums that had previously appeared in the Billboard Album Top 200.
HBO president Richard Plepler used just one word: “math”: Richard Plepler, Q&A at the Harvard Business School, December 4, 2012.
responsible for well over 60 percent of legal digital music downloading: NPD Group, “iTunes Continues to Dominate Music Retailing,” press release, September 18, 2012.
Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment Page 33